Today, Viking Therapeutics (VKTX 7.92%) has no products, no revenue, and happily, almost no debt. By early 2029, the odds are good that none of those factoids will still be true if the biotech is still around. People who bought shares today are liable to be either very pleased or very disappointed, with little chance of being somewhere in between.
Here's what could happen over the next five years and how it might leave the company and its shareholders.
Assume that this one giant catalyst plays out
The buzz surrounding Viking today stems from its VK2735 program to treat obesity. On April 27, it published the results of its phase 2 clinical trials, with the data indicating that the drug appears to be quite effective at assisting with weight loss when administered over a 13-week period. At the highest doses tested, patients lost 14.7% of their body weight, whereas patients administered the placebo control lost only 1.7%.
A phase 3 clinical trial will soon follow, and within the next few years, it's possible that the drug will be approved for sale. If that happens, the sky's the limit for Viking's stock, as the uber-deep obesity therapies market could be worth as much as $77 billion by 2030, per estimates by analysts at Morgan Stanley. Its shares already flew upward by 119% in the last 30 days, and it hasn't even made a dollar of sales yet.
And if the rest of VK2735's development proceeds as planned, there will likely be more gains to follow. Viking is currently testing an oral formulation of the same drug in phase 1 trials, and being able to take a daily pill rather than getting an injection will doubtlessly make the therapy all the more sought after, assuming it works just as well and that it doesn't feature worse side effects. The precise financial impact of commercializing an anti-obesity pill is difficult to calculate, but no doubt could be enormous.
Regardless, in 2029 Viking will have an entirely new clinical-stage pipeline packed with new metabolic disease candidates. It might also be pursuing expansions to the approved indications on the labels of its commercialized medicines. Finally, it's reasonable to expect more collaboration activity, as management will be interested in betting on some of its smaller peers with promising research and development programs or technology if it successfully secures a home in the market.
There's a chance the future won't be so sunny
Now that we've reviewed the optimistic trajectory that Viking Therapeutics could take over the next five years, it's time to consider the less favorable possibilities. If V2735 fails to perform to the satisfaction of regulators at the Food and Drug Administration in its phase 3 trials, or if the company's regulatory filing is rejected for some other reason, it won't be the end of the road.
Viking's program to treat metabolic dysfunction-associated steatohepatitis (MASH, formerly known as NASH) is currently in phase 2b clinical trials. According to Research Nester, the market for MASH drugs could be larger than $48 billion annually by 2035, and globally rising rates of obesity are expected to be one of the key forces driving growth of demand. So the biotech will still have a shot at entering a massive market.
But it could potentially flub entering that market, too, as MASH has historically been a difficult disease to treat. Or if competitors see their obesity medicines continue to gain traction over time, and they probably will, they could ultimately crimp the need for therapies to treat MASH. In other words, the upside for shareholders will likely be very limited in comparison to the sunnier scenarios.
At present, the evidence points to this company's stock being higher in five years than it is today. While there are still substantial risks ahead, the probability of it experiencing a major safety signal in its late-stage clinical trials is decreasing as the data continue to trickle in.
So if you're willing to wait for the bull thesis to play out over the next few years, invest away -- just be aware that even though this stock looks great right now, there's no such thing as a guaranteed victory in biotech.
